Dialog takeover is a ‘disaster for Europe’ says Arm co-founder

Hermann Hauser is a co-founder of Arm Holdings

Credit: Chris Williamson

A Japanese takeover of Reading-based Dialog Semiconductor has been branded "a disaster for Europe" by the co-founder of Arm.

Chip designer Dialog announced earlier this week that it had agreed to a €4.9bn (£4.3bn) takeover by Renesas Electronics, a Tokyo-based company which is among the largest suppliers of automotive chips.

It marks the latest in a flurry of swoops on British semiconductor companies, and comes amid an ongoing row over whether US giant Nvidia should be allowed to buy Cambridge-based Arm Holdings.

Hermann Hauser, one of Arm’s co-founders and a venture partner at Amadeus Capital Partners, said Dialog had developed "world leading" technology.

Dialog designs chips used to manage smartphone power circuits, support bluetooth connections and illuminate displays. Its systems can help deliver wireless connectivity at low power — something which is expected to feed into Renesas’s work on electric and driverless cars. 

Mr Hauser said this was "one of the few growth markets Europe has great strength in and we should do everything to keep it in Europe".

The venture capitalist, whose is an early backer of Graphcore, a $2bn start-up that designs chips for artificial intelligence, said the Dialog sale was "a disaster for Europe".

Vince Cable, the former Business Secretary, meanwhile said the deal was indicative of chip companies "becoming very valuable because of the US squeeze on China". 

"We need to be sure that the Department for Business, Energy and Industrial Strategy have looked at this carefully."

Dialog Semiconductor is listed in Frankfurt, but based in Reading, and employs around 250 people across its Reading, Edinburgh and Swindon locations. 

Its takeover comes as Britain ramps up scrutiny of takeovers in areas including semiconductors. Last year, the Government tabled a bill which would give it more powers to intervene in deals. 

Currently, a deal between Nvidia and chip company Arm is facing a competition probe in the UK. Arm had been seen as a jewel in the crown of British tech but was bought by SoftBank for £24bn in 2016. The Japanese conglomerate last year agreed to sell it to US company Nvidia, one of Arm’s customers, sparking concern in the sector.

Imagination Technologies, another British semiconductor leader, was bought for £550m by Canyon Bridge, a private equity firm whose largest shareholder is China Reform, a Beijing-backed group.